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2017 Corporate Income Tax Rates

The following table shows the general and small business
corporate income tax rates federally and for each province and territory for
2017. The small business rates are the applicable rates after deducting
the small business deduction
(SBD), which is
available to Canadian-controlled private
corporations (CCPCs). The small business rate is available on active
business income up to the amount of the Business Limit. The federal
business limit of $500,000 begins to be reduced when a CCPC's taxable
capital reaches $10 million, and is eliminated when taxable capital reaches
$15 million. This phase-out of the small business deduction is also in
effect in some provinces.

The federal general rate is net of the 10% federal tax
abatement and 13% (2012 and later years) general rate reduction. The
general rate reduction is disallowed for a personal services
business (PSB), for taxation years beginning after October 31, 2011,
resulting in a federal corporate tax rate of 28% for PSBs, until the end of 2015. The Federal
2016 Budget increased the corporate tax rate for PSBs from
28% to 33% effective January 1, 2016.

2017 Corporate Income Tax Rates

Active
Business Income

Investment
Income
CCPC

General

Small
Business
(CCPC)

Business
Limit

Federal(3)

15%

10.5%

$500,000

38.7%

Alberta (4)

12%

2%

$500,000

12%

BC (6)

11%

2.5% / 2.0%

$500,000

11%

Manitoba (5)

12%

0%

$450,000

12%

New Brunswick (2)

14%

3.5% / 3.0%

$500,000

14%

Newfoundland & Labrador (1)

15%

3%

$500,000

15%

Nova Scotia (8)

16%

3%

$500,000

16%

Northwest Territories (1)

11.5%

4%

$500,000

11.5%

Nunavut (1)

12%

4%

$500,000

12%

Ontario (11)

11.5%

4.5%

$500,000

11.5%

Prince Edward Island (1)

16%

4.5%

$500,000

16%

Quebec (10)

11.8%

8%

$500,000

11.8%

Saskatchewan (7)

12% / 11.5%

2%

$500,000

12% / 11.5%

Yukon (9)

15% / 12%

3% / 2%

$500,000

15% / 12%

The general corporate tax rate applies to active business income in
excess of the business limit.

(3) On
October 16, 2017, the Department
of Finance announced that the small business tax rate would be reduced to
10% effective January 1, 2018 , and to 9% effective January 1, 2019. The
news release backgrounder indicated that the dividend tax credit rate for
non-eligible dividends would be adjusted to reflect the reduced corporate tax
rate, but did not indicate what the rate would be. On October 24, 2017, in
conjunction with their Fall Economic Statement, the Department of Finance tabled
a Notice
of Ways and Means Motion to reduce the gross-up rate for non-eligible
dividends to 16% in 2018, and 15% thereafter, with the non-eligible dividend tax
credit revised to 8/11ths of the gross-up for 2018 and to 9/13ths of the
gross-up for 2019 and later years.

(4) Alberta's 2016 Budget indicates that
the small business corporate tax rate is reduced from 3% to 2%
effective January 1, 2017.

(5) Manitoba announced that their business limit
would be increased to
$500,000 from $450,000 in 2017, as per their December
1, 2015 news release. However, there was a change in government
in 2016, and the 2017 Budget indicated that the increase would not happen.

(6) The BC
September 2017 Budget Update lowered the small business corporate tax rate from 2.5% to 2.0%
effective April 1, 2017. However, the general corporate income tax rate will increase to 12%,
effective January 1, 2018.

(7) The Saskatchewan
2017 Budget announced that the general corporate income tax rate would be
reduced to 11.5% on July 1, 2017, and to 11.0% on July 1, 2019.
Subsequently, on November 7, 2017 they passed Bill
84 (pdf), which sets the general corporate income tax rate at 12% effective
January 1, 2018, increases the small business threshold from $500,000 to
$600,000 effective January 1, 2018, and sets the enhanced
dividend tax credit rate at 11%. There is no change to the small
business corporate income tax rate.

(8) The Nova
Scotia 2017 Budget announced that the threshold for the small business
deduction would be increased from $350,000 to $500,000 effective January 1,
2017. Nova Scotia
provides a corporate tax holiday under s. 42 of their Income Tax Act for the
first 3 taxation years of a new small business after incorporation. See New
Small Business Tax Deduction on the Nova Scotia website.

(9) The Yukon
2017 Budget announced that the general and small business corporate income
tax rates would be reduced effective July 1, 2017.

(10) According to Quebec's
Corporate Income Tax Rate page, the general tax rate will be reduced each
year by 0.1% until 2020. Thus, it will be 11.7% in 2018, 11.6% in 2019 and
11.5% in 2020.

(11) Ontario's Fall
Economic Statement indicated that the small business corporate income tax
rate will be reduced to 3.5% effective January 1, 2018.